Increased consumer demand and the rising number of buyers for day nurseries will push up the price of childcare businesses next year, predict surveyors, valuers and agents Christie and Co in 'An overview of the nursery sector in 2002'.
Meanwhile, figures released by Abbey National Business show a 63 per cent leap in mortgages for nurseries in the first six months of this year.
The rise in demand for starting or expanding childcare businesses is leading to funding being more readily available from banks. Christie and Co surveyor Courteney Donaldson said, 'We anticipate that continued strength and potential for growth, illustrated within the sector, will provide additional comfort to financial institutions, and an increased level of funding will be made available by the high street banks.
'Historically, a trait of failing nurseries has been poor financial control and awareness by operators and optimistic initial projections in start-up scenarios. Changes in the sector, in respect of profitability, have led to a change in the perceptions of lending institutions.'
Christie and Co witnessed an upsurge in demand during 2002 from both new entrants and existing smaller operators seeking to acquire established businesses. Acquisitions include the purchase of Kindercare by Busy Bees and Scotland's Red Apple being bought by Bright Horizons Family Solutions.
Gary Hockey-Morley, Abbey National business director, warned that even with the thriving market potential, nursery owners should produce a well-researched business plan. He said, 'The most successful nurseries are those that have robust business plans and a clear understanding of their local market, but once all the potential pitfalls have been thought through it's a great industry to get into.'
* A Daycare Trust report, Facing the Future: Building on Sand, has questioned the Government's reliance on the private sector delivering childcare for all families.
The report compares childcare to social care and looks at the record of the private sector in delivering social and residential care for the elderly since the mid-1980s. The number of places in private care homes has fallen by 50,000 since 1997, attributed to higher minimum standards, the introduction of the minimum wage and rising property prices.
According to the report, the private care sector is unwilling to meet the Government's need for places unless it guarantees their fee income irrespective of the occupancy rate.
